Nine New Reasons to Buy American Art
Selected American Art is in demand and prices have firmed. Our review of seven 2011/2012 year-end auctions is clear about this. New highs are advancing slowly, and records are being set. Oscar Bluemner's, Red Farm in New Jersey, sold at Christie's in December for $5,346,500--setting a record and adding to overall rising interest. A number of reasons underlie the favorable trend--which is actually benefitting from the current recession economy. First (1) and foremost is relative price stability. When it comes to volatility, American art relative to Contemporary Art and European Modernism is a low beta asset class. That means its price swings are comparatively moderate and that it hugs the rising trendline more closely. New collectors are attracted to this price stability as they exit hedge funds that have been hit hard by declining stocks. And while we are on the economic causes, do note the persistent low yield environment--since conservative yield oriented investors can't scratch up a penny's worth of interest, many obviously think its better (2) to cut risk, enjoy the beauty of American art and wait for inflation and rising demand to provide for future capital gains. Increasingly then, American art is becoming an investment of choice. Finally, from this perspective, with the recession curbing home sales, (3) many homeowners are staying put and improving their castles, which means greater demand for paintings overall. Simply put, masterpiece American paintings are much more beautiful than a gold bar.
New Money Signals New Interest
The growing interest in American Art is a signal of new attention for these masterpieces. First and foremost in raising attention was (4) the opening of the new American wing at New York City's Metropolitan Museum. The event was eagerly anticipated and advance knowledge of its contents brought higher prices from dealers speculating on stronger demand--even at a time when dealers are known to have reduced inventory and are holding a highly limited number of works for sale. This accelerated a trend sparked when Boston's Museum of Fine Art opened its new American quarters only a year earlier. Indeed scarcity (5) of high quality offerings is another reason for current higher demand--pickings are slim as one dealer remarked to us. The dealer community was well aware that one of the central features of the new wing was the giant canvas of Washington Crossing the Delaware by the history painter Emanuel Gottlieb Leutze--so note that in the just completed American auction round Leutze set records for three works offered including a sale over a million. And works by Bierstadt and Cropsey also saw accelerated interest. Overall, collectors appeared to be responding to (6) rising patriotism and neo-nationalism stimulated by the new wings, their focus on American history, the coming election and the recession overall. Newell Convers Wyeth's historical illustrations outpaced the younger Wyeth's landscapes. Even New York's long hibernating Historical Society Museum got into the act with a once in a century major revamp!
New Collectors Are Risk Averse
Overall the economy is driving new money into the American art market. But the new money is putting safety first, and doing so as we have seen by moving into the Ameican art collectibles asset class. But the new money is tightly focused--wanting only the best of the best and sticking with the historical track record. In the just ended auction round, this was particularly evident in sales of the great American neoclassic realist Martin Johnson Heade. Buyers were willing to pay more than a million for classic Heade works depicting orchids and hummingbirds--but his lesser still-lifes of flower arrangements and more mundane landscapes struggled to reach a hundred thousand. Collectors are very tightly focused and they want something American! Nineteenth-century still life works suffered in the latest round--Harnett drew little attention, and a major Roesen was passed. And collectors also turned up their noses at portraits and figure studies--this was a very noticeable trend as works by Chase, Benson, Paxton, Henri and others were frequently passed--and in favor of narrative studies by Brown and Moran--particularly showing poverty urchins in humorous poses or historical moments. And the new buyers are (7) much less interested in abstract expressionism--which is everywhere showing signs of having peaked. New buyers would rather hire a knowledgeable dealer to bid on classic American art rather than risk getting stuck with over-priced private visions without universal appeal--media hype has finally spawned a backlash.
Web Galleries Are Making A Difference
Slowly the web reshapes all markets. Discount brokers were once unknown in the stock market. Now they account for most of retail trading by self-directed investors. Finally, the web is having its impact on the American art auction market. More and more new money is spent on (8) web purchases of American masterpiece paintings. Our own success as a gallery is a testament to this trend. In the past--now the ancient past--the major auction houses sold almost exclusively to galleries, and these transactions were shrouded in high-priest mystery. Collectors from the hinterlands toured brick and mortar palazzo metropolitan galleries off Madison Ave and paid through the nose for their purchases and the imprimature. We were once advised by a gallery owner not to purchase at auction--only to find the same gallery owner bidding against us and taking the work--and then we discovered a mark-up (note recent law suits) that was shocking to say the least. Those days are dying--particularly as internet transparency makes price information widely available to collectors. Web galleries (9) can make value-oriented collectors a lot happier when it comes to future appreciation potential. New demand for American art is being satisfied in new ways--with shared benefit for all!
